Icra’s prediction for the sugar sector is Stable, backed by the anticipated improvement in revenues, stable profitability, and comfortable debt coverage metrics along with the Government’s policy support, including the ethanol blending program (EBP).
Commenting on the expected domestic sugar production and prices, Girishkumar Kadam, Senior Vice President & Group Head, Icra, believes that the domestic sugar prices, which are currently in the range of Rs 38 to 39 per kg, are expected to remain firm till the start of the next season, thereby supporting the profitability of the mills.
He said, “Icra projects the net sugar production to decline to 30 million metric tonne in FY25 from 32 million metric tonne in FY24 based on the expectation that higher diversion will be allowed towards ethanol production amid the high sugar stock level. Even if the diversion towards ethanol is increased to 4 million metric tonne in FY25, the closing sugar stock level will likely remain moderately high. Therefore, clarity on the policy for allowing diversion beyond the cap of 1.7 million metric tonne and the exports remain the key monitorable for the sector.''
Analysing the scenario, Icra expects the closing sugar stock to be around 9.1 million metric tonne as of 30 September 2024, appreciably higher than the 5.6 million metric tonne on 30 September 2023. This would be equivalent to 3.8 months of consumption. The closing stock is expected to further increase over four months as of 30 September 2025, as per Icra's estimates.